repo report comes out, the all-important number will have an effect on wall street and could have an impact on the president's job approval rating. that'll do it for me. i'm martin savidge and you can find me on facebook and newsroom continues right now with don lem lemon. lemon. have a great weekend. -- captions by vitac -- www.vitac.com hello, everyone, i'm don lemon at the cnn headquarters in atlanta. >> i'm ali velshi at cnn in new york. >> it is you and me tonight, ali. with the nation perched on the edge of the fiscal cliff we are keeping a close watch on events to prevent an economic disaster. >> we hope. we will spell it out what those talks mean to all of you watching. and if they fail to reach a deal what it means for you, the economy and your wallet. >> thank you, ali. no news is good news and fiscal cliff talks are at a standstill with neither side wanting to give ground at this point. >> trying to find a lining

around that cloud, if there is one, and democrats and republicans are still talking. they are still trying to reach a deal to stop the spending cuts and tax hikes that are likely or possible to push our economy back into the recession if we go over the fiscal cliff. >> but ali, neither side is budging much. you have been reporting on it for the last couple of hours. friday though, president obama said that he was optimistic that the two sides could reach a deal. this morning, he sounded less positive though. >> if, you know, if people start seeing that on january 1st, this problem still has not been solved, that we haven't seen the kind of deficit reduction that we could have had, had the republicans been willing to take the deal they gave them, and if they say that people's taxes have gone up which means consumer spending will go down. >> and keep in mind that the

senate is the first hurdle. any deal has to pass the house. we are not into the senate yet and the republican speaker john boehner plablamed the crisis one president saying he the one who has never found a way to say yes. >> so you are in new york and i'm in atlanta, and we get to washington now, because the senior congressional correspondent dana bash is closely following the negotiations from capitol hill, and dana, you have been there and talking to people, and where are we on this? >> well, the senate majority leader harry reid was on the floor moments ago saying that the senate will reconvene at 11:00 a.m. tomorrow. the senate will reconvene tomorrow at 11:00 tomorrow, and that means no senate votes tonight which is not good news for everybody looking at the calendar and looking at the watch at this point and not the calendar to see that it is midnight tomorrow night that everybody's taxes in this country will go up. simply put, both sides are not at a place where they believe that they can come up with

anything to put on the senate floor for a vote tonight. they will give it until the actual deadline, december 31st tomorrow, to reconvene. however, senator reid did say, don, that talks will continue tonight, so that is a good sign at least that the talks are continuing, but the fact that they are not voting tonight when everybody expected this would be the last, the last threshold tonight is not so good. now, during the afternoon, there were several meetings and actually two big meetings i should say. the democrats held one and republicans held the other at the same time, and i talked to a republican senator and a democratic senator coming out of the meetings about where they understand these talks stand. take a listen. >> obviously, what had happened here between the two leaders in the senate had broken down, because the senate democrats fail failed to come forward with a counter offer to the proposal that the republicans made last night. so hopefully the discussion between the vice president and senator mcconnell will get us back on track and hopefully a

breakthrough and something that we can ultimately vote on yet today or tomorrow that would overt what we all believe is an economic disaster. >> most successful businessmen and successful people they have talked to are willing to pay more. and so it remains to be seen whether the republicans being driven by a very extreme group of house members will allow the economy to hurt because of their desire to protect multimillionaires in this country. that is what it is going to boil down to. >> so two things to flesh out there, don. first of all, senator john thune, a member of the republican leadership talking about talks between senator mcconnell, the republican leader, and the vice president joe biden. that is something that started transpire today. senator mcconnell as our jessica yellin reported, he reached out to joe biden and that is a sidebar conversation, but an important one, because the two of them have a longstanding relationship, and joe biden was

a senator for three decades, and they have worked through the bipartisan deals before and like the actual tax cut extension that happened a couple of years ago and the second thing that you hear claire mccaskill, the democrat, talk about is that republicans are holding out for taxes for the rich. that is something that we heard the president talk about ad nauseam on the campaign trail for over a year, but it really does seem to be a boiling down to those same arguments, and the same philosophical differences behind closed doors and then technically, process-wise, what is going on is that they have to figure out where the threshold is for how high of an income you have to raise enough votes in the house where there is a big republican majority in order to get it to the president's desk. >> a lot of information, dana. standby, because even though the senate has gone home, still maybe more news. dana will be joining us later. thank you. ali? >> don, we have cnn contributor

and columnist for newsweek and the daily beast john avalon joining us from new york. john, the remarkably and so dana had a lot of detail as don pointed out. why are we having this discussion with all of this detail with less than 36 hours to go to the deadline? they have had, and you know how many days to work this out? h 516 days since we first learned about the sequester and 12 years since we first learned that the bush era tax cuts would expire. >> yeah. the world's most predictable political crisis and this is a totally self-made problem. congress set this time bomb and now scrambling to diffuse it. it is a dereliction of duty. we were told all year that nothing would get done in the presidential year, because it was contentious, and that the lame duck would be productive and politicians would come together and reason together and think about the national interests, but it has not happened. they can't seem to focus on

solving a problem until the literal last minute and the senate is at home and everything is going to be done tomorrow on new year's eve, and folks should be furious, because if it were a business everybody would be fired, and they are not getting the job done. the american economy and the fragile recovery is hanging in the balance. >> john, what do you think has to happen? one of the things that claire mccaskill, and senator claire mccaskill was saying today that is that the house is held hostage by a small group of extreme republicans. we know that grover norquist may or may not have influence, but in the end, what is holding them back from a deal right now? >> one thing that is holding them back is that speaker boehner does not have full control over the conference. he has about 50 votes on the far right of the party that did not back his plan b to set a $1 million threshold. at the end of of the day, if a deal is going to be done, it is only going to happen if the center of both parties comes together. if you make any concessions

significant to the democratic base, you will have concessions on the far right as well. that coalition is ultimately what got us across the finish line that ended the whole debacle of the credit rating, and here we are again. there is not that much time. if we go over the cliff, democrats are willing to put forth a bill to save the tax cuts, but it is the dysfunction that is the problem and the lack of predictable and the prediction of brinkmanship that has folks at home furious and it should. >> i am getting a lot of twitter activity on this, and that is the chain cpi and we have heard about this already, and john boehner originally propose d this, and chained consumer price index, and for our viewers a lot of people have commented that this is overly simplistic and explain it. it is the inflation measure of which increases to a number of benefits are tied. for instance social security, they have a basket of goods and the goods go up and the percentage goes up as well, but

chained cpi says l s lis li s i like consumers do. if the price of beef goes up, then buy chicken. some people like it, and some don don't, and it is not the worst idea in the world, but we talked about this earlier, and the problem is that nobody wants anything coming off of their plate. >> right. that is what just from to getf-go is a non-starter and the president said consistently that everybody has to give a little bit and the essence of the grand bargain, they know the outcome with their eyes closed. the deficit and the debt and that is happening today to put a patch on not going over the cliff. there has to be new revenues and some entitlement reform, and cpi is the most painless way to do it. and the president offered it in a deal as recently as a week or two ago, and spending cuts, but right now, it is not a grand bargain, because we have the debt ceiling hanging out in two months.

this is an attempt to avoid political pain and going over the cliff and we can't get an agreement on a patch with less than 36 hours to go. >> and don, this is the problem, something is the going to hurt. we can't get out with no pain, and we have all sorts of things and nobody wants to pay for it, don. >> you two are fired up, too. and the people at home are too, right. >> and 516 days since we knew that the deadline would come. >> and right at the deadline, and they are going home. >> right. and we are not. >> we are not. we will be here until who knows. okay. a stalemate or breakthrough? with hours to go, lawmakers are searching for a compromise. what are the chances of reaching a deal in washington? we will talk with a democratic lawmaker ahead. and cut! very good. people are always asking me how we make these geico adverts. so we're taking you behind the scenes. this coffee cup, for example, is computer animated. it's not real. geico's customer satisfaction is quite real though. this computer-animated coffee tastes dreadful.

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this whole fiscal cliff mess shows how out of touch you are with the way that people live in the country. you are off in la-la land and people are saying that you are are acting like a bunch of spoiled brats who are more interested in being right than in doing the right thing and actu actually representing the people who elected you. >> more interested in being right than in doing the right thing. you know, don, i'm not one of the guys who piles on with the mob and hates politics and hates washington, but people are frustrated and i have trouble finding fault in their frustration at all. welcome back, everybody, to the special coverage of the fiscal cliff negotiations. don and i will stick with you while we follow what is going on. take a look at what is going op at the capitol and pretty picture, and i hope they are getting work done in there. lawmakers are getting work done and they are filing in for the roll call. you don't want to leave it for the last minute. the talks are aimed at

preventing us from going over the fiscal cliff and they are not making a lot of progress. the two sides are talking, and that is the good news. that is the best that can be said for what is happening on capitol hill. if you wished that the deadline would push the democrats and the republicans to get to a deal, we are still, don, waiting for that to happen. i suspect that i have a better chance of growing hair than we have of getting a deal tonight. >> yes, probably. i mean -- [ laughter ] -- you are right, pretty pictures, and that is about it at this point, and nothing pretty is happening right now, because, ali, in less than 30 hours before we go over the fiscal cliff, and it is not clear whether a last-minute deal is even possible or whether this is going to be all about shifting blame. i want you to listen to senate majority leader harry reid. >> with 36 hours left until the country goes over the cliff, i remain hopeful and realistic about the prospects of reaching a bipartisan agreement, and at some point in the negotiating

process, it is obvious when the other side is intentionally demanding concessions that they know that the other side is not willing to make. we are not there, prpt. i hope, mr. president, that we are ready to go forward with the status, but we are not at the point where i can say we have this for you. >> and now joining us from washington, congresswoman bass, and can you talk to us about the standstill right now. are you optimistic that there is any agreements made today? >> well, you know, i am optimistic. i mean i know it sounds like a very short period of time, 30 hours, but that is enough time for a deal to come together, and you know that the basic parameters of that deal, i believe it is shaping up, whether it is $250, $400, the extension of unemployment, the doc fix, i do think that the basic ingredients of a plan is there. 30 hours is time enough for us to get it done.

i know it sounds very short, but it isn't. >> and congresswoman, why does it have to come down to 30 hours and you have been listening to my colleague ali velshi of you v have had 513 days do do that. >> well, i understand that, and i agree and share that frustration. you know the democrats right now are holding a caucus and i believe that the republicans are meeting as well, and believe it or not, we are on the floor as you speak passing legislation on other matters. and so it is a frustration for all of us, but i do believe that 30 hours, we are going to get a deal and it is not the grand deal, but i do believe it is going to be a deal that prevents frus goi us from going over the cliff. >> we are talking about the frustration of people and that has been the constant theme running throughout the process, the frustration of the voter, especially about congress and bickering and instead of doing what is best for the kun tcount. do you feel that on capitol hill? >> sure. i think that we all feel that frustration. but you know, these are really

large problems to deal with. and you are dealing with the clash in philosophies. but i know what we all agree on and we all agree that the taxes should not go up for 100% of americans. i certainly believe that preventing the taxes to go up on 98% of the americans and 97% of small businesses is something that is attainable and something that we can get done. i'm hopeful that will happen. >> what are some of the big issues that need to be addressed in the next 30 hours? >> well, i think that the big issue is that what is the size of the deal we are going to put forward. i think that, you saw what happened earlier today with the social security being put on the table, and i'm glad that my republican colleagues removed that from the table. i do think that we need to do whatever we can to prevent the tax hikes in this period over the next two days, but then there are bigger issues that we have to deal with and you know

that we probably won't get to sequestration, and that is a hammer hanging over our head, and the debt ceiling is still something that we have to resolve right after the first of the year, and it would be wonderful to think that if we could all come together in the last 30 hours and do the big deal, that part i don't think is realistic, but it will prevent us from going over the fiscal cliff. >> hopefully the next time i see you, and it is in a few hours on the air here, and you are back because you say, don, we have a deal. >> and because i told you so. >> yes. thank you, congresswoman bass. and ali, someone tweeted and they say, don lemon and ali vel shishgs i am looking to you to keep me calm, because i have just accepted that we are going over the fiscal cliff, happy new year. >> look, the world is not going to come to an end when it happens and two points, and people keep asking me, what will happen to me if we go over the fiscal cliff, and one thing is that you will feel some taxes going up and the paycheck is going to be smaller, with but that is two weeks to a month

before it happens, but the more important thing is what has already happened, don, and that is that people spent less money, and the consumer confidence which had been going up for a long time has started to come down and the economy is feeling worse, and the congresswoman mentioned sequester and we won't get to that. the sequester is $109 billion in automatic spending cuts this coming year, about $3,500 more per year in taxes for the average household, and our unemployment rate which has been coming down, and we are trying so hard on this could go back p up. this is according to the tax policy center, and the congressional budget office. these are big deals. >> you are saying that all of the progress that we have made, the lawmakers in washington are basically shooting flus the foot. >> yes, 2013 could be a good year for us, don. 30-plus months of jobs being created and a natural gas boom in the country, and oil boom in the country. we have houses coming back, and

we have low interest rates and so much can go right for america in 2013, i hope that these folks at capitol hill are paying attention and they are doing something as the congresswoman said, and filing in for a roll call vote right now. it is our last, best, and only hope for stopping this fiscal cliff business. we are going to speak to a republican lawmaker in a moment, and marcia blackburn and in the meantime, you are watching the speciacoverage here on cnn and don lemon and me and our colleagues in washington. we will be right back. s with adding a friend, ♪ ♪ could end with adding a close friend. ♪ the lexus december to remember sales event is on. offering some of our best values of the year. this is the pursuit of perfection.

as republicans and democrats are at an impasse, both sides are blaming each other, and the markets will open up by the way

in asia in the next couple of hours and you might start to see a reaction, but although, i don't know what they have to react to, but our own markets will open in 14 hours from now here in the united states. maybe they will react to something, too, but my point is that congress could ruin a good economy. for perspective, we will talk to a republican from tennessee, representative marcia blackburn. thank you for being with us. >> good to see you, yes. >> i know we have talked about this many times and individually, you are all not to blame, but people are angry, and they do, and it does stand out when we say that we did know this was coming. 516 days ago, we dealt with the debt crisis which is one of the most stupid and low moments of american political and economic history and 12 years ago, we knew that the bush tax cuts were going the expire in initially ten years and then in two more years. what possible explanation could there be to the american people as to why we are all struggling

with less than 30 hours to go to come up with a deal? >> well, and first of all i would say that i am pleased that people are outraged. i'm pretty outraged also when you look at the fact that the senate has not sent legislation back to us. you know something, ali, leaders make choices and choices have consequences. and the choice that the senate made was to not take up the bills that we had sent them. we sent them reconciliation on may 10th. we sent them the tax extenders and by the way, that one, hra passed with 19 democrat votes on august 1st. august 2nd was the defense request reconciliation, and then the tax reform over on september 19th. all of those have been on leader reid's desk, and my question is why would he let it sit there? when you have paperwork on your desk, and let's say this is your employee, and the paperwork is

marked on the desk urgent and some hitting in may and august and why not take it up. >> plenty of blame to go around, but last week, and go back a week ago -- >> okay. >> and when john boehner came up with what i kept seeing the pictures of john boehner and president obama sitting together and very good picture and they are both good guys to come up with a plan, and john boehner came up with a plan that democrats would not enjoy the idea that taxes going up on people earning more than $1 million a year and not acceptable for most people, but he could not get members of his own caucus to agree to it, so it is not fair for the republicans to somehow suggest that we are here because of the democrats. i am not saying that the democrats had nothing to do with it, but you can't get your own act together, and the republicans and the democrats in the house can't get their act together. >> well, we are here as inaction, and here is the deal on that, and what the president wanted to do was to generate enough revenue to cover government for agent eight days, seven or eight days and what do

you do with the other 350-plus days leftover? you cannot continue to run trillion dollar deficits every year, because we are already at $16 trillion in debt. what we have is a debt crisis and quite frankly, i think that to our children, to our grandchildren, it is absolutely immoral that all of this would be kicked down the road, kicking that can down the road, and then heaped over on their heads. >> well, it is a little bit immoral that it is happening today and forget the grandchildren, but how about us? >> well, i agree with you, and well, that is why you have got inaction that you are looking at. hr-8, ali, that was a bill filed in january 2011 by the speaker. the senate knew it was coming to them, and the house knew it was coming to the floor, and they worked the bill and they got bipartisan support and that would have extended tax reductions for everybody. >> right. and it had bipartisan support,

so that the thing is that it is inaction, and quite frankly, i hope that my colleagues in washington that all of us learn a lesson that you cannot kick the can down the road. you have to put the tough issues on the table and you have to deal with them. >> but you will agree with me that if we come to some deal in the next 30 hours, and either we come to one or don't come to one that will involve kicking the can down the roadings because at this point we are out of time for anything more significant than that? >> well, the point is that you cannot do something that generates revenue and not address the spending. when you are running a $4 billion a day deficit, you cannot do something that is only revenue and, you know -- >> well, that is not -- >> and you and i agree that the entire budget process ought to be looked at and overhauled. >> yes, and the entire tax process. but there is a lot of work to do and let's hope when we get back to work that we do that in a more timely fashion. thank you, congresswoman.

>> i agree. thank you. >> and as you can tell, they don't see eye to eye on these thing, and can the cnn contributors do any better? we will talk to two of them about the fiscal cliff ahead. ra, try running four. fortunately we've got ink. it gives us 5x the rewards on our internet, phone charges and cable, plus at office supply stores. rewards we put right back into our business. this is the only thing we've ever wanted to do and ink helps us do it. make your mark with ink from chase. so, the 5.3-liter v8 silverado can tow up to 9,600 pounds? 315 horsepower. what's that in reindeer-power? [ laughs ] [ pencil scratches ] [ male announcer ] chevy's giving more. now through january 2nd, no monthly payments until spring for qualified buyers. get the silverado for 0% apr financing for 60 months

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to here? at university of phoenix we're moving career planning forward so you can start figuring that out sooner. ln fact, by thinking about where want your education to lead, while you're still in school, you might find the best route... leads somewhere you weren't even looking. let's get to work. we are back. ali, if if people knew what happened in the breaks on this show. >> i was not planning in the long term planning i was expecting to be somewhere traveling and i was not expecting to be here, so everything is upended and as a result, i have my dinner here and chinese food and little coke zero to wash it down. >> i aid -- i said, ali, you have all of that stuff and you have coke zero. it is a good thing that you are charming. >> yes, because i am not winning

anybody over with my looks and tight body. >> back to the news. >> back to the news. >> everybody up to the speed on the talks of the looming fiscal cliff, ali. >> not a surprise that democrats and republicans are not budging from the decisions, and here is a live picture and something is going on there, because the lights are on at capitol hill, and optimists hoped that a deal would vote on something tonight, but we know that the senate will not vote on anything that to do with the fiscal cliff until tomorrow. one sign of how desperate it is, vice president joe biden has joined the talks, and speaking from his senate days, republican leader mitch mcconnell speaking, but what the gop wants, they won't get. both sides are still talking, even if they are not necessarily listening to each other. >> the republican leader has shown absolutely good faith, but it is that we are apart on big

issues. >> i am willing to get it done, but i need a dance partner. >> both of the republicans and the democrats agree there need to be changes to the u.s. tax code, and that is one thorny issue to avoid going over the fiscal cliff. let's go to jean sahati who is a senior writer for cnnmoney.com, and probably the person most immersed in the my knew that -- minutia of all of the stuff going on and so you have political headlines of stuff going on like tax rates and there are back channels and people have been discussing this for a long time, and what is your take? >> a long time. >> and first of all, real tax reform is a process to take two three years at best probably and that is not certainly going to happen tonight and not worked out, but what is the likelihood of a deal? what would it look like from a tax perspective? >> which one a tax reform deal or the fiscal cliff deal? >> no, the fiscal cliff deal, and what might they be arriving

at in the next day or so? >> well, here is what we are hearing. i will believe none of it until i see it. >> right. >> the rates will go up for high income people, and we don't know how high income, president obama wants $250,000 as the threshold, but republicans are pushing for more than $400,000, but it is splitting hairs at a certain point and especially now in the 11th hour or less than 30 hours away from the deadline. so we will see that, and we hope that they are going to put an amt patch in to protect the middle-class in from playing the wealth year for tax year 2012 yet, and we are totally running out of time on that one, and we have a bunch of tax extenders for businesses and individuals and they have expired and will they extend those? and the payroll tax will certainly expire and nobody is talking about that. the first pay xhek in jcheck in will be smaller regardless because of that. >> and you are so good at giving

explanations for 99.8% of americans who are not accountants. but the amt patch will affect you for the 2012 income, and not the 2013, so that matters immediately. >> right. in effect, the irs came out last week and said, hey, lawmakers, if you don't do an amt patch by december 31st, we will have to delay 100 million returns which means delays refunds for those folks and 30 million people will have to pay it and normally it is 4 million or 5 million and that is how ridiculous it s. >> it is a tax that is designed to make sure that the highest, richest income earners pay some tax and some people who are not high ip come earners will be hit with this and there is a lot brokewen the law. and for all of the viewerers casually watching this and hoping that it is going to be fixed go to money.com and look at her stuff, because there is a lot of good understandable detail about what exactly is at

stake. it is not easy for us to just digest it into a couple of minutes, because it is a lot of stuff. >> jean said it is the 11th hour and it is really. ali, why does it have to be a scr scramble as the fiscal cliff is approaching and why right now? what will it take to hold congress' feet to the fire finally? i mean, if it has not been held to the fire now sh, and how soo will people start feeling the pain if no deal is reached? ali, bring in both sides of the political aisle and republican strategist anna navarro and maria cardona in washington. welcome the both of you. anna, why are we here right now? why are we sitting here right now talking about this right now with the senate gone home and congress in there working and the light is on, but few people are at home. why are we doing this? >> there is no good explanation. there's definitely no justification and no excuse for this. this is like, don, when you at the beginning of the year, when you are in school at the

beginning of the year and you have been assigned a big project and you leave it to the last night. when i used to do thoo i was punished. if kids behaved the way the congresspeople were, they would be in time-out. if it were the private sector, they'd all be fired. no excuse. and the only solution i would tell you lies with us, the american people, and with us, the voters. demanding that they start working together. and actually coming up with something. we cannot continue to have the spectacles every few months. it is like making sausage. >> can we talk about the optics of this, maria, because many people say, i hear you up there, guys, don, and this is a republican and democratic problem, but we are here h because the republicans won't play ball. >> well, i mean, you nknow, it s easy for me to say that and i actually do think that politically the republicans will suffer more if this is not done. i mean the republicans lost the election, and a big reason was

because the middle-class americans and the normal everyday people didn't think that this was a party that understood what they were going through. and if they are now seen as being the ones that are making taxes go up on everybody because they want to protect taxes for the rich, that is not going to be politically good for them. but at the end of the day, this is not good for democrats either, so i don't think that either democrats or republicans want us to go over the cliff, because while again republicans will be blamed more, democrats are not going the come out smelling very nice on this either, because everybody, everybody, don, you, ali, ana, me, the american people are frustrated that we are waiting until the 11th hour for this to be done. >> ana, i will let you respond to that, because i know you want to. >> no, listen, i absolutely agree, and it is not everyday that maria and i agree, but we agree on this one. everybody is going to look back and the country is going to look back and the economy is going to look back and tomorrow we have the opening of markets and it is

not going to be a pretty picture. i can tell you that people looking from the outside of the country cannot understand this circus-like spectacle we are putting on. it is unsern certainty and not d picture that we should be doing on the december 30th with the days ticking down. and let me tell you something else, if we don't get to a deal, just remember, that january 3rd, we have a whole new batch of congresspeople, and senators swearing in who have not even been part of the negotiations. so it is really, it is very much, you know, an urgent time frame that we get something done. it is not going to be a good solution, and it is not going to be a long-term solution, but we have to continue demanding a long-term solution to address these very serious problems. >> yes. and can we get ali in here as well, because this is good and since we are here sh, all of us someone offers something very good on social media and says context, just curious about the

yearly income of the talking heads offering faults and solutions, and the lawmakers as well, because when you think of the average salary of an american worker and the people on capitol hill doing this, and all of us sitting here, and, you know, granted we do pretty well and we are -- >> yes. >> and we are speaking for the american people? >> yes. >> you were talking about frustration, ali, go. what do you say to that? >> well, listen, we are in an economy and very few and if we went over the fiscal cliff totally and no patch and nothing was fixed in the next if few week weeks and i don't believe we will do that, but if we did the hit to the average family could be as high as $3,500 a year and maybe as low as $2,500, but as high as $35 and not only is that a lot of money, but it is an economy of real money and real expenditures, but the follow-up effect is much bigger. so that the family may withstand having $3,500 less, but the people buy fewer things, and the economy slows down and then

people lose their jobs. so maybe you can live without $3,500 less a year, be you can'tley without a job. that is the more serious effect of what it does to my paycheck in a month is whether this slows down the economy. we are not going very quickly in the u.s. economy, but we are are moving forward. people, that is where it hits you when it is not your fault and people are tired. in 2008 something happened to the economy that was with nobody's fault and created by people on high and now we are doing the same thing, and getting into something, what did i do to deserve this, the average american is thinking to themselves. >> and sitting here watching us and sitting on television and think that our salaries are inflated anyway and the pundits. >> well, fair to say it that is higher than the average american's salary and higher than 16 million people who don't have jobs in the country. >> very good analysis. >> well, what you are doing tonight of putting the people on the street of putting those videos of facebook videos and putting the social media

reaction is useful, because the people in washington need to hear from the everyday american. i was at target today, and i got approached by three different people who recognize me from cnn asking about this. this is not going to happen five days ago or a week ago. people are starting to get worried an folks in washington have to know that. >> and i agree that the american -- >> and that -- >> and the american people are the ones who have to chime in here and they are the ones with with the power. >> the producers are saying move it along and move it along and thank you a, in, and a maria and take itway, ali. >> the fiasco is being felt on main street and capitol hill and the investment community on wall street. i want to talk to you about how all of this may affect the markets and the economy and not talk tact fat cats, but because of your 401(k) and the investment investments and talk about that on the other side. [ thunder crashes ]

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as americans are making themselves heard about the fiscal cliff, the impact of this is daunting for the economy, and for the marketsch i want to bring in kenneth volkari who is a great friend of ours and it is few hours before the markets open and we have a good indication of the futures and the bells ring at 9:30 eastern time, and at 9:20, the futures are accurate.

i'm not sure how accurate 14 hours out, but we are indicating a positive open on the s&p 500 tomorrow, a nd can you explain that to me? >> well, is it slightly positive or what? >> well, slightly positive. >> well, first of all, there is a couple of things going on. i think that half of of asia is closed today, right. you had hong kong and china open and australia only half a day. so you will get a muted response, but don't for get that we have really got one more day of this, right. there is not going to be a deal tonight, because it is not dramatic enough, and they have to let it go another day, and the markets might get a little bit of a breather, but trust me, as tomorrow goes, and as trading get starts and the day wears on and appears that we are getting nothing, you will start to see the pressure on the market as we move into the end of the day. like i said on the prior show, if we get a band-aid, that is worse than getting actually letting us go over the cliff. >> why? >> because i think that if we go over the cliff, then there is

clarity and everybody knows what happens, taxes here and spending there, and the only thing that can happen after that is that it can improve because the legislators will talk about cutting the taxes and raising the spending and standing up to say, what a great job we did and pat themselves on the back. if we get a band-aid, all we have done is to cause more confusion and kicked the can down the road and led wide open to another fight and end in january while we have a serious debacle hitting us in the face on january 31st. >> you cannot sit it out. you to trade every single day even if it is a bad day tomorrow in the markets, you can't stay home. here is the point, people have been asking, what do i do with the money? what do i do? get out of stocks and put my money in cash, what do i do? >> well, ready, it depends upon who you are. are you someone who is putting money a wway for the long termkr someone who is going to invest in the ira and leave it there for 30 or 40 years and you want days like that nerm that in ter

volatility, because there is not a market crash, but there is pressure on the market and reprice the environment and reprice the risk in the market at the moment, and so prices will get cheaper. but if you are a long-term player, you want these days to happen and start putting money to work in the market as it gets a little bit cheaper. my sense is that there is a ton of money out there on the sideline sidelines and people are talking about 2013 being kind of a turnaround year with better days ahead so that you want to, if you are the long-term guy, take advantage of the weakness in the market. >> yeah, and you know, kenny, i want to remind people that with this dow and the s&p 500 which is a lot of people's 401(k)s is up more than 12% for 2012 and all of the nonsense in europe and the fiscal cliff, and the market is better than the long term average in 2012. i keep saying that if washington does not mess it up, 2013 could be a good year for america. >> you are absolutely right. so what we might find is that we might hit volatility in january and a rough month, but you know what, don't despair, because i

think that as we move on, and listen, we will get through this and this is not the end of the world, b world, but the market will have to reprice the risk based on what they see. after that, then the market will start to make headway and we will see some turn around in china, right. seeing some turn around there already, and seeing the green shoots in the united states, but the only thing that we have to wor with ri about is europe and they are in recession and if they come out that is only going to add to the story. >> kenny, i love the optimism and you have seen many of these things come and go and it is useless and ridiculous to be in the position, but as you say, it is not the end of the world. ken poll cari, we will see you tomorrow. >> yes. >> and how will this fiscal cliff impact your taxes, and we will break it down with the fiscal cliff calculator with don lemon and yours truly. but it's our tradition! that's roughing the card holder.

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washington is to secure the plesings of liberty to ourselves and our posterity. invest in our children, in our schools, and in our communities. raise taxes on the rich and eliminate corporate loopholes, and do not cut social security or medicare. thank you. happy new year. >> and so how will not reaching a de specifically impact how much you pay in taxes? the tax policy center has a tax calculator. so it allows you to estimate how your family could be affected. josh levs is here in atlanta breaking down the different scenarios. the only thing you can't say is i'm going to start a drinking game. don't say kick the can down the road. jifs not going to use that phrase. i have been covering this at cnn.com and doing everything i can to avoid saying things like that. the figure a lot of people know if you know any figure is $2,000 because president obama says it a lot. the average family will end up

spending $2,000 more if the fiscal cliff is not averted. let me show you something. you can find out how it would impact you directly by using this. there's a lot of numbers you have to plug in to make sense of it. obviously it can't be exact, it can't be precise, it can't predict the future, but i want to show you some examples we have pulled out. let's go to the graphic here that has a few of the examples we're showing you here. it would take, for example, this scenario, married with no children under the age of 65. if a couple in that instance is making about $57,000 a year, then according to the calculations, that couple would end up spending $2,262 more on taxes. that couple is high income earning, $106,000 for the income between the two of them, you're looking at more than $4,200 extra in taxes. a good example there of what we're looking at. i want to show you another example. there's something that might

surprise you in the middle of this next one. i want to go to these numbers fast. if this is a couple that's married and has two young children. if they're making $33,000, they're going to see their income drop by about $3,700. they will pay that much more in taxes. now, a middle income family at $75,000 there would actually be slightly less affected. would end up paying $3,300 in taxes and a high income would pay a little more than $7,000 more in taxes. the reason you're seeing that, this is important to understand, you know how every year at tax time we report to you there are a lot of people that don't pay federal income taxes. what happens is some people are not earning enough money that ultimately they owe those taxes, but people who are saving during that time, even getting money back from the federal government, will find out they're getting less money back from the federal government. so that's why in some cases some of the lowest income earning people will be impacted even more than some of the people in the middle because they will find that they're getting

substantially less back from the government. we're going to bring you some more scenarios. the link to this is up at my facebook and twitter @jo @joshlevscnn and see how it would affect you and use that to influence your understanding of what would happen if we go over the cliff. >> josh levs not kicking the can down the road. >> not once. it is a story you have to see to believe. ahead a mom and her kids reunited after nearly a week all thanks to a cnn viewer. i just u. did you really? from the plane? yeah, i can manage my policy, get roadside assistance, pretty much access geico 24/7. sounds a little too good to be true sir. i'll believe that when pigs fly. ok, did she seriously just say that? geico. just click away with our free mobile app.

we're going to get back to the hill gothss in just a minute

but another story we're following. it unfolded right here on cnn. teresa nash came on our show making a desperate plea for help to find her two missing boys. a nationwide search was under way to locate ben an henry. they were on a holiday trip with their father in tennessee. we were supposed to return to georgia december 24th but they never came back. during our live interview teresa sent a message to her son. >> children, please call mommy. you know my phone number. i have taught you how to do it. if daddy doesn't have a phone, you can ask anybody you see. anybody you see has a phone. remember my number and call mommy's number. you can ask people at stores. you can ask people at the gas station. you can ask people anywhere you see. you need to call mommy and vf at phone. they will help you. anybody will help you. call mommy. >> just minutes after that interview, the boys called their mother, told her that they were safe, and that they were in austin, texas. police there tell cnn that

someone at a hotel recognized the boys from the amber alert and our program and they contacted police. >> the law enforcement community nationwide, we take these amber alerts seriously when it deals with kids, with children. this is one of those cases that it was activated and it worked, and we're thankful for that. the other thing, we had a citizen that paid attention to this, actually saw it on cnn news, recognized the kids on there, recognized the kids here at the location, and in turn called 911, and that's what prompted our response out here. >> teresa jumped on a plane to texas and was reunited with her sons just hours later. tonight at 10:00 p.m. eastern, teresa and her sons return to our show to share their story. make sure you tune in. the next hour of our special coverage begins right after a quick break.

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